Telecom Technology Factors Into Banks’ Competitive Strategies

With accelerating advances in telecom technology, banks increasingly are looking at their telecom strategies as a means to create competitive advantage.

Over the past two decades, the scope and quality of telecommunications technology has exceeded just about anything anyone could have imagined. From the introduction of the Internet to the masses to the explosion in mobile handheld devices, banks realize that telecom is about more than just getting a dial tone -- it can provide a business that extra edge in a very competitive environment. Accordingly, banks are thinking more strategically about their telecom deployments.

According to Harry Banks, senior vice president, networks and planning, with Atlanta-based SunTrust Bank ($180.3 billion in assets), the world's appetite for telecom services has become nearly insatiable. "The technology has evolved to where people greatly depend on telecom services to manage their everyday lives and for businesses to gain competitive advantages in some cases and gain efficiencies in others," he says.

Richard Mattox, director of technology architecture and business services at Charlotte-based Wachovia ($719.9 billion in assets), says banks couldn't do much without carefully developing their telecom plans. "Telecom components have always been key elements to doing business for financial institutions," he asserts. "Due to the technology enhancements we've seen in recent years, there is a greater dependency on telecom and the functions of the network. As a result, companies are looking at their investments and platforms here more strategically." >>

Mattox adds that the network element increasingly is relied upon to deliver business solutions at the bank. "We work very closely with other areas of the IT organization and the business to see how the network can facilitate better delivery of business services," he explains.

But this has created somewhat of a vicious cycle. Delivery of services via the network has enabled the development of new products; in turn, the development of new products is creating an insatiable demand for bandwidth.

The demand, however, "is not proportional to new checking accounts. This means we have to provide the means for new business capabilities while keeping our ongoing service costs flat or declining," SunTrust's Banks explains. "For us, this is being accomplished through leveraging newer network technologies, such as MPLS [multiprotocol label switching], which offer more capability but at a lower cost."

Cell at All Costs?

Leveraging advances in telecom technology has created other, often unexpected challenges for banks as well. For example, Pejman Roshan, cofounder and vice president of marketing with Sunnyvale, Calif.-based Agito Networks, which provides an enterprise fixed mobile convergence solution that leverages multiple mobile technologies, says that with the increased use of cell phones in the workplace, companies are facing issues they never had to deal with before, such as signal strength and the particulars of cell phone plans.

"Five years ago, mobile phones were just a convenience and people tolerated bad coverage inside the office. [Now] times are different," Roshan comments. "I know one bank that rolled out mobile devices to its branch workforce. It worked great because they were able to respond to customer issues faster and they were more productive. The problem for them was that the average cell plan is 500 minutes per month. This is fine if the phone is being used as a convenience. However, when you rely on the phone as a primary device, this becomes costly. This gave the bank pause and they eventually pulled the phones out of the branches, which was a shame because it was a good productivity tool."

Furthermore, there is a control issue around cell phones. "Mobile phones are disconnected from the desk phone," says Roshan. Without the right policy in place, he adds, IT departments might feel that the personal cell phone is taking control of communications away from the enterprise. "When a person leaves a company, his accounts may only know him by that cell number he used rather than the number on his desk phone," Roshan explains, comparing the situation to the use of personal e-mail accounts in the office. "Many corporations are saying that employees cannot conduct business over private e-mail. This is what's starting to happen with cell phones."

According to Roshan and others, the solution is to implement technology that will allow calls to reach employees wherever they are on whatever device using one phone number. Fortunately for banks, this is exactly what many of the newer telecom technologies enable.

Of course, the nature of telecom implementations at banks varies, and the appropriate solutions depend on each bank's current infrastructure, goals and budget, among other considerations. For the purposes of this article, however, three major technologies are examined: Voice Over IP (VOIP), wireless and telepresence. Each is being deployed to some degree at financial institutions, and all come with benefits and problems.

Voice Over IP: Beyond the Cost Play

For its part, Wachovia relies greatly on VOIP. "The deployment of VOIP has been a big win for us," says the bank's Mattox. "We're seeing huge benefits with the ability to collapse our network and reduce our internal cost. We're able to pull back business from vendors. And as the vendors realize this consolidation, they're becoming more aggressive with their pricing models."

Traditionally viewed only as a cost play, VOIP capabilities actually have been misunderstood over the years. While audio quality has been an issue with VOIP, it definitely is improving, according to Rajeev Kutty, VOIP product manager at San Mateo, Calif.-based mobile and Internet test and measurement company Keynote Systems, who points out that the technology offers benefits beyond cost control.

"Customers today are trying to reach their banks by multiple touch points," observes Kutty. "With VOIP, employees at a bank can carry one number with them anywhere they go. In the contact center, agents can have the breadth of the bank's knowledge right at their fingertips to enable a richer customer experience. VOIP now enables these features that were only available to high-end contact centers just a few years ago. It's helping to commoditize this kind of technology."